Jacklyn Tull James C. Tull v. United States

Jacklyn Tull appeals from the district court’s judgment in favor of the United States in which the court determined that she was responsible for the failure to pay over taxes withheld from employees’ wages by Hatfield Trucking Service, Inc. The sole issue is Tull’s contention that the district court erred when it determined that Hatfield did not have the ability to direct that a check for auction proceeds be applied by the Internal Revenue Service to the payment of the corporation’s trust fund obligations, rather than to other corporate tax obligations. We agree with Tull and reverse and remand for further proceedings.

BACKGROUND

Tull was the Secretary and Treasurer of Hatfield. It began experiencing financial difficulties and failed to pay a portion of its federal payroll tax liability for each of the first three quarters of 1989. Because of its financial problems, Hatfield decided to sell some of its assets at auction. Thus, on November 22, 1989, it entered into an auction agreement with Western 11 Auctions. Tull advised the IRS of the proposed auction, and on January 8, 1990, the IRS served a notice of levy on Western with respect to Hatfield’s payroll tax liabilities for the…